Tax Newsletter JANUARY 2016

DLO’S Tax Newsletter

Issue 62 – January 2016

Tax Law Update

Exemption on Examination for SMEs Registered on a Single Account 

The National Assembly has issued a Royal Act (the “Act”) that allows companies or partnerships – whose gross incomewas not in excess of 500 million Baht in the past accounting period (calculated over a 12 month period which must have ended prior to or on December 31, 2015) – an exemption from an examination, investigation, assessment or order to pay tax and criminal liability under the Revenue Code.  This exemption applies to companies or partnerships whose gross income arises from an accounting period which has a start date before January 1, 2016 or where the value of the tax base, the revenues or the instrumentoccurred before January 1, 2016. However, this exemption will not apply to companies or partnerships in the following circumstances:

1. Where a company or partnership has been examined by an officer before the Act came into force; or
2. Where a company or partnership is a party to legal proceedings in an official inquiry, or in the civil and criminal courts; or
3. Where a company or partnership has issued or used fake tax invoices or provided false liststo the Revenue Department.

This exemption must follow the rules and conditions prescribed in the Act, which has been in effect since January 1, 2016.

The Revenue Department has since issued further guidance regarding the Act, which includes: the features of a company or partnership to which the Act applies; how to calculate accounting periods; and what tax will be exempt from the examination process.

For more details, please visit: http://goo.gl/9s3B6v , http://goo.gl/UwxGDP , http://goo.gl/H19djc and http://goo.gl/VuMXxQ

Tax Rate Exemption and Reduction for SMEs Registered on a Single Account 

The Cabinet has issued a Royal Decree to exempt and reduce corporate income tax for companies or partnerships (SMEs) incorporated or registered before January 1, 2016, with paid-up capital of not more than 5 million baht, and whose gross income from goods and/or services is not more than 30 million baht. Such companies or partnerships must enter into the ‘SMEs Registered on a Single Account Program’ and must not have been previously rejectedfrom this program. The rules are as follows:

Exemption of Corporate Income Tax

1) For net profit in an accounting period which started on or after January 1, 2016 but not later than December 31, 2016.

2) For net profit of not more than 300,000 baht in an accounting period which started on or after January 1, 2017 but not later than December 31, 2017.

Reduction of Corporate Income Tax

To reduce corporate income tax for companies or partnerships under the second exemption above, to 10% of any net profit which exceeds 300,000 baht, in an accounting period which started on or after January 1, 2017 but not later than December 31, 2017.

However, these benefits must comply with the rules and conditions as provided under the Royal Decree, which come into force on January 2, 2016.

For more details, please visit: http://goo.gl/NmVK1J

Tax News

Reducing Personal Income Tax Rate

The Director–General of the Revenue Department has proposed a policy to reduce the personal income tax rate to the Minister of Finance, who has agreed and is supporting its enforcement by 2017. An important factor is to reduce the personal income tax rate, increase deductible expenses, increase child and other personal allowances. If this policy is entered into force, a person who receives income not exceeding 30,000 Baht per month, will not have to pay tax.

For more details, please visit: http://goo.gl/TvTzh8

Interesting Dika (Supreme Court) Judgments

Dika (Supreme) Court Judgment No. 8675/2558, in re:

The interest which may be refunded to a taxpayer

Ms. A                                        Plaintiff

The Revenue Department      Defendant

The plaintiff was an employee of the Bank for Agriculture and Agricultural Cooperatives (the “Bank”). The Bank had an early retirement project and at that time, the plaintiff had applied for this project while also getting approval to resign from hisjob. Under this project, the plaintiff received money which was exempt from the calculation of Personal Income Tax according to section 42(17) of the Revenue Code, read with clause 2(36) of the Ministerial Regulation No. 126 (B.E. 2509) and the Notification Regarding Income Tax (from a provident fund)(No. 52).

The plaintiff paid withholding tax on the money received from the provident fund, but the amount of withholding tax was in excess of the amount that the plaintiff should have paid. The plaintiff requested a refund of the excess – with interest – at a rate of one percent for each month the excess accrued interest.  This period was calculated from the following day after  the expiry of three months since the deadline for filing the tax return, to the date which is identified in the tax refund Notification in accordance with clause 1 of the Ministerial Regulation No. 161 (B.E. 2526).

The facts were, that after the plaintiff filed the tax return, an official sent a written notice to the plaintiff to provide the terms and conditions of the Bank’s early retirement project by March 3, 2011. However, the plaintiff did not provide the document within the deadline without requesting an extension of time from the Director-General. Therefore, the plaintiff was unauthorised to receive interest, as March 3, 2011 was the deadline according to the last paragraph of clause 2 of the Ministerial Regulation No. 161 (B.E. 2526). The plaintiff may claim interest only from the following day after the expiry of three months since the deadline, to March 2, 2011.

Legal Opinion

Summarising the case as mentioned above, the plaintiff requested a Personal Income Tax refund which was paid in excess. The Supreme Court held that the Revenue Department had to pay back the excess. The material issue in this case was that the plaintiff lost his right to receive interest on the refund – calculated from March 3, 2011 – because of the failure toprovide the document which showed whether the plaintiff resigned from his job in accordance with the law.

According to the Supreme Court’s decision, the taxpayer should be cognizant of the fact that if the taxpayer does not provide the necessary document(s) to the official within the deadline, the taxpayer should ask for an extension of time from the Director-General. If the taxpayer were allowed an extension of time, the right to receive interest will be lost, from the extended deadline date, to the date that the document(s) are provided to the official.  The taxpayer would not receive interest from the date of the failure to provide the document(s) to the official, according to the Supreme Court’s decision as mentioned above in relation to clause 2 of the Ministerial Regulation No. 161 (B.E. 2526).

Mr. Taradol Chantarasap
Lawyer

 Should you require any legal advice on tax law then please contact us at Dharmniti Law Office Co., Ltd. 2/2 Bhakdi Building 2^nd Floor, Witthayu Road, Lumphini, Pathumwan, Bangkok, Tel : (66) 2680 9751, (66) 2680 9753 Email: budhimak@dlo.co.th or sureelukt@dlo.co.th